Low wages part of structural problem, says Rafizi


PETALING JAYA: With 50% of Malaysians being paid below RM2600 a month, Rafizi Ramli says low wages are among the three main structural problems beleaguering the economy.

The Economy Minister said, in his televised debate with PAS MP Mohd Syahir Che Sulaiman on Wednesday (Aug 9), that the country’s economy is lagging behind as it is heavily reliant on primary industries such as plantations and oil and gas.

“These industries had generated handsome returns in the past, so much so we have become complacent in expediting the development of other industries.

"As a result we did not increase the wages of workers in important sectors such as manufacturing and services because we are too comfortable with the existing economic activities as the low wages will generate handsome returns,” he said in the Debat Model Baharu Ekonomi Malaysia programme.

He said Malaysia is now facing problems as it is losing its competitive advantage with low wages as neighbouring countries such as Indonesia and Vietnam have also started offering the same.

“Only now we have realised that we are lagging behind in terms of expertise and technology. We were supposed to be competing with countries like South Korea, Japan and Europe.

"In fact, we are trapped in the old economic model,” he said.

He said this led to the second structural problem, which is low wages and salaries not increasing in tandem with the rising prices of goods and services.

Rafizi said the first thing he did after his appointment to the Cabinet was to ensure that wage statistics are produced on a quarterly basis.

“The wage statistics report produced last week confirmed the hypothesis that the low wages are the second structural problem in the country’s economy. Some 50% of our workers are paid below RM2600 a month, which is only RM20 above the latest poverty rate threshold of RM2580,” he said.

“The median wage of those aged between 20 and 24 years old, who are in their first jobs, is RM1,682 a month, which is RM182 more than the minimum wage of RM1,500,” he said.

He said the low wages had made it difficult for Malaysia to develop talents who are capable of building an innovative and high value economy.

He said this has also led to a poor fiscal position.

“The slow economic growth has caused the previous governments to depend on debt to drive projects to spur economic growth.

"Syahir’s good friend, Tan Sri Muhyiddin Yassin, loves to announce economic stimulus packages,” he said while taking a jibe at the former prime minister who had announced several stimulus packages of over RM500bil during his time in office.

He said driving economic growth with debt will only become a plague for the future generations.

“When there is slow economic growth and wages are low, the government’s tax collection will also be low.

"The situation becomes worse when the government keeps giving out cash aids and subsidies which are not targeted to appease the people’s anger but it did not resolve the core issues,” he said.

Citing examples, he said the former government decided to increase subsidies to tackle the shortage of food supply, which he said is not a sustainable solution.

On that note, Rafizi said the three structural problems cannot be resolved by using old ways which is through debts.

He said this is also why Prime Minister Datuk Seri Anwar Ibrahim had announced the Madani Economy Framework for radical measures to resolve these core issues.

He also said this was the first time the government has intervened to resolve the wage issue for civil servants and the private sector through the progressive wage model.

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